Arthur J. Lynch

Partner

New York
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019-6099
T 212 728 8225
F 212 728 9225
alynchwillkie.com

Arthur J. Lynch is a partner in the Tax Department. Artie practices tax and insurance law, including matters relating to the convergence of the insurance and capital markets (such as insurance-linked funds, catastrophe bonds and sidecar investments), public and private offerings of securities of offshore insurance companies, U.S. and cross-border reorganizations, the formation of captive insurers, the structuring of alternative risk financing arrangements, the structuring of international insurance and reinsurance operations of global insurers and the use of capital market and hedge fund strategies by insurers. He has represented insurance and reinsurance groups, private equity and hedge funds and underwriters in such transactions.  Artie has been recognized in The Best Lawyers in America for excellence in Insurance Law.

Convergence of Insurance and Capital Markets
Artie represents insurance and reinsurance groups, asset managers, banks and insurance-linked funds in the formation of, and additional capital raising by, funds that offer insurance-linked investments, including collateralized reinsurance, catastrophe bonds, sidecar investments, industry loss warranties, weather derivatives and other insurance-flavored investments. Artie also represents a significant number of insurance and reinsurance groups, investors and underwriters in the structuring of catastrophe bond programs and sidecar vehicles. On the life insurance side, Artie helped structure extreme mortality bonds, excess reserve (xxx and Axxx) and embedded value securitizations and the first-ever health insurance-linked securities offering.

Capital Markets and Mergers and Acquisitions
Artie represents issuers and underwriters in capital markets transactions, including IPOs in the offshore insurance sector, secondary offerings by more seasoned companies and debt offerings by U.S. and non-U.S. issuers. Artie also has significant experience advising investors and underwriters in the formation and private financing of start-up insurance and reinsurance groups.

Artie provides advice to many clients with respect to the application of the cross-border reorganization and anti-inversion rules, particularly in the context of the Bermuda reinsurance marketplace. Artie also advises on the structuring of the ongoing globalized operations post-reorganization.

Other Insurance Matters
Artie advises on the creation of single parent and group captive insurance programs. This advice includes choice of domicile, structuring ownership and the insurance or reinsurance program and providing guidance on situs and scope of operations.

Artie also provides guidance on the formation of life settlement funds and has significant experience analyzing structured financial products that have insurance-like characteristics, such as credit default swaps. Artie also has analyzed tailored reinsurance transactions, including longevity reinsurance and finite reinsurance.

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Highlights

Arthur J. Lynch is a partner in the Tax Department. Artie practices tax and insurance law, including matters relating to the convergence of the insurance and capital markets (such as insurance-linked funds, catastrophe bonds and sidecar investments), public and private offerings of securities of offshore insurance companies, U.S. and cross-border reorganizations, the formation of captive insurers, the structuring of alternative risk financing arrangements, the structuring of international insurance and reinsurance operations of global insurers and the use of capital market and hedge fund strategies by insurers. He has represented insurance and reinsurance groups, private equity and hedge funds and underwriters in such transactions.  Artie has been recognized in The Best Lawyers in America for excellence in Insurance Law.

Selected Significant Matters

Convergence of Insurance and Capital Markets
Artie’s representative transactions in the insurance-linked securities sector include advising:

  • Nephila Capital Ltd. in raising capital for managed funds and structuring operations;
  • Hudson Structured and Pillar Capital in connection with the formation, structuring and financing of managed funds;
  • Aeolus and Leadenhall in raising capital for managed funds;
  • Insurance-linked funds sponsored by insurance/reinsurance groups, including Hiscox, RenaissanceRe, SCOR and XL, in their formation, structuring and financing;
  • Insurance-linked funds sponsored by asset management groups, including Credit Suisse, Deutsche Asset Management and Schroders, in their formation, structuring and financing;
  • Lancashire in connection with the formation, structuring and funding of Kinesis Re;
  • Allstate, Amlin, Argonaut, Aspen, Assurant, Axis, Catlin, Flagstone, Glacier, Hanover, Liberty Mutual, Munich Re, Nationwide, Platinum, Renaissance Re, Safepoint, SCOR, State Farm and United Property in their catastrophe bond offerings;
  • Arch, National Mortgage and United Guaranty in mortgage insurance securitization transactions;
  • Credit Suisse in the securitization of operational risks;
  • Lancashire on the creation of a new retrocessionaire sidecar company allowing for flexible access to funds;
  • Serengeti Asset Management L.P. as the lead investor in a Validus sidecar;
  • Argonaut, Aspen, Axis, Barbican, Brit, Chubb/ACE, Hamilton Insurance, Hiscox, Lancashire, Markel, Montpelier, Munich Re, Paris Re, Renaissance Re and SCOR in the formation, structuring and financing of sidecar facilities;
  • Investors in sidecars established by Partner Re and XL;
  • Credit Agricole and Swiss Re in an embedded value securitization of closed blocks of reinsurance business retroceded by Aurigen Re;
  • Aetna Life Insurance Company in the first-ever health insurance-linked securities offering;
  • Munich Re and SCOR in extreme mortality securitizations;
  • UnumProvident in the financing of its long term disability reserves; and
  • Aegon N.V., Genworth Financial, Grange Life, Legal & General America, Metlife, Mutual of Omaha, Reinsurance Group of America and Sun Life in the financing of XXX and/or AXXX reserves.

Capital Markets and Cross-Border Reorganizations

  • Argo in its purchase of Ariel;
  • Allied World in its acquisition by Fairfax;
  • Assured Guaranty in its acquisition of UK subsidiaries of MBIA;
  • Alea Group in its sale to Catalina;
  • Pine Brook Partners in its investment in Global Atlantic;
  • Argonaut Group in its merger with PXRe Group, Ltd.;
  • Essent Group in its acquisition of an operating platform and intellectual property from Triad Guaranty;
  • Fox Paine in its acquisition of United National Group;
  • AEGON N.V. in its acquisition of Transamerica Corporation;
  • Charman Holdings on its sale to ACE Limited;
  • Aspen Insurance, Axis Capital, Essent Group, Lancashire Holdings, Maiden Holdings, RAM Holdings and United National Group in their IPOs and subsequent offerings;
  • Underwriters in the IPOs and subsequent offerings of Assured Guaranty, Endurance, Flagstone, James River and Third Point Reinsurance;
  • Investors and companies in the formation, structuring and private financing of Ariel Holdings, Blue Point Re (Wachovia), CGA Ltd., Channel Re Holdings, DESCo Re (D.E. Shaw), Essent Group, Glacier Reinsurance (HBK Investments), RAM Holdings, Rockhill Holdings and Watford Holdings Ltd.;
  • Underwriters in public equity offerings by ACE Limited and Darwin Professional Underwriters;
  • Aspen, Axis, Lancashire and Sirius in senior debt offerings and underwriters in debt offerings by Everest and Assured;
  • Nationwide Mutual in its contingent surplus note and surplus note deals;
  • Renaissance Re in preferred equity and debt offerings; and
  • NBCU in securitizations of cable and network and advertising sales receivables and cable subscriber fees.

Other Insurance Matters

  • Maiden Reinsurance in connection with the expansion of its European platform;
  • Ambac Financial Group Inc. in connection with its litigation with the federal government over the tax treatment of credit default swaps and the synthetic commutation of its financial guaranty policies;
  • Alberta Investment Management Company in connection with the formation of a life settlement fund;
  • Prudential in a series of longevity reinsurance transactions;
  • Insurance and reinsurance company clients in finite reinsurance inquiries by various regulatory bodies; and
  • California Earthquake Authority in considering alternative sources of reinsurance capacity and general tax matters related to its status and programs.

Selected Publications and Lectures

  • “Application of Border Adjusted Tax Proposals Creates Uncertainty for Offshore Insurers,” Willkie Client Memorandum (December 2016).
  • “US. Court of Appeals Rejects IRS ‘Cascading’ Tax on Foreign-to-Foreign Retrocessions,” Willkie Client Memorandum (May 2015).
  • “Treasury Department and IRS Release Proposed Regulations Clarifying Application of PFIC Analysis to Offshore Insurers,” Willkie Client Memorandum (April 2015).
  • “FATCA Treatment of Cat Bond Issuers,” Trading Risk (March 2014).
  • “District Court Rejects IRS “Cascading” Tax on Retrocession Premiums,” Willkie Client Memorandum (February 2014).
  • "Proposed Treasury Reg: Series LLC and Cell Companies," Captive Insurance Company Reports (April 2011).
  • "Seeking Out Safe Harbors," Captive Review (March 2003).
  • "Tax Implications of Risk Financing," in Risk Financing: A Guide to Insurance Cash Flow.  International Risk Management Institute, Inc.
  • "Tax Implications of Alternative Risk Financing," Risk Funding & Self-Insurance Bulletin.

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